When Is It Time for Me to Give Up Control of My Business?

Kendall Rawls is filling in for Dr. Merlot to answer questions he has received from family business owners across the country.

Before we get started, you may be wondering who is this Dr. Merlot Dude? The Doc is the straight-talking alter ego of Loyd Rawls, who is the founder of The Rawls Group. An alter ego may seem a little silly, but it does provide levity to a topic many people view as heavy.  What is funny though, is succession planning is actually a topic owners need to embrace because it creates strategies for them to create the future they envision. One of our mottoes at The Rawls Group is to do good and have, which is just what “Dr. Merlot” provides Click to learn more about Dr. Merlot and Alter Egos.

Now, let’s dig into the question of When is it time for me to give up control of the business?

Dr. Merlot’s Perspective:

The time to give up control is when you have confidence in your qualified successors to be good stewards of control. Confidence and stewardship are everything. High performance does not guarantee high potential, and being a leader is much more than being in charge. Leaders evolve from capacity, confidence, commitment, and experience. Leaders are humble and focused on goals that impact the welfare of the business, those they are leading, and the extended group that depends upon the continued success of the business. Leaders are always pursuing improvement.

Kendall Rawls’ Insight:

The ability to drive performance, growth, and achieving business goals is essential to a good leader and as a qualified successor.  And, driving performance, growth, and business goals are directly tied to recruiting, retention, and motivation of people.   No matter what your business is, it depends upon people to deliver products and services.

In our ever-changing world, a leader’s ability to communicate effectively with a diversity of people is essential.   Research has shown, people stay, or people leave because of the culture.  Culture is made up of many things, some key ingredients to the sauce are respect, the opportunity for growth, and shared feedback.

Leadership sets the tone for the culture. So, whoever you have chosen to fill your shoes, ask yourself, how do they make people feel and how are they influencing culture?

 If you are unsure of how to answer the question, ask key leaders in your team whom you trust and consider engaging in engagement surveys or a 360 review.  According to McKinsey’s Organizational Health Index, there are 4 key qualities people look for in their leaders and ultimately organizational cultures:

Supportive
Strong orientation to results
Seeks different perspectives
Solves problems effectively

They may not have all the tools right now and the likelihood of anyone having it all is slim to none.  However, what you are looking for is someone who can build a team, spot potential, wants to develop others, and exudes trust in those around them.

In addition to the 4 criteria above, below are a few questions to consider as you are evaluating your developing successor capacity and commitment to developing as a leader.

Are they humble enough to admit what they don’t know and lean on others’ expertise?
Do they actively sa

Kendall Rawls is filling in for Dr. Merlot to answer questions he has received from family business owners across the country.

Before we get started, you may be wondering who is this Dr. Merlot Dude? The Doc is the straight-talking alter ego of Loyd Rawls, who is the founder of The Rawls Group. An alter ego may seem a little silly, but it does provide levity to a topic many people view as heavy.  What is funny though, is succession planning is actually a topic owners need to embrace because it creates strategies for them to create the future they envision. One of our mottoes at The Rawls Group is to do good and have, which is just what “Dr. Merlot” provides Click to learn more about Dr. Merlot and Alter Egos.

Now, let’s dig into the question of When is it time for me to give up control of the business?

Dr. Merlot’s Perspective:

The time to give up control is when you have confidence in your qualified successors to be good stewards of control. Confidence and stewardship are everything. High performance does not guarantee high potential, and being a leader is much more than being in charge. Leaders evolve from capacity, confidence, commitment, and experience. Leaders are humble and focused on goals that impact the welfare of the business, those they are leading, and the extended group that depends upon the continued success of the business. Leaders are always pursuing improvement.

Kendall Rawls’ Insight:

The ability to drive performance, growth, and achieving business goals is essential to a good leader and as a qualified successor.  And, driving performance, growth, and business goals are directly tied to recruiting, retention, and motivation of people.   No matter what your business is, it depends upon people to deliver products and services.

In our ever-changing world, a leader’s ability to communicate effectively with a diversity of people is essential.   Research has shown, people stay, or people leave because of the culture.  Culture is made up of many things, some key ingredients to the sauce are respect, the opportunity for growth, and shared feedback.

Leadership sets the tone for the culture. So, whoever you have chosen to fill your shoes, ask yourself, how do they make people feel and how are they influencing culture?

 If you are unsure of how to answer the question, ask key leaders in your team whom you trust and consider engaging in engagement surveys or a 360 review.  According to McKinsey’s Organizational Health Index, there are 4 key qualities people look for in their leaders and ultimately organizational cultures:

Supportive
Strong orientation to results
Seeks different perspectives
Solves problems effectively

They may not have all the tools right now and the likelihood of anyone having it all is slim to none.  However, what you are looking for is someone who can build a team, spot potential, wants to develop others, and exudes trust in those around them.

In addition to the 4 criteria above, below are a few questions to consider as you are evaluating your developing successor capacity and commitment to developing as a leader.

Are they humble enough to admit what they don’t know and lean on others’ expertise?
Do they actively say and show trust in their team?
Do their words match their actions?
Are they actively pursuing furthering education, coaching, or development?
Do they ask questions?

Dr. Merlot’s Perspective:

There is no reasonable public successor leadership certification program because each leadership opportunity has unique leadership demands.  You must be the one who certifies your successor. If you are not confident in the leadership potential of your successor, you should not transfer control.

Kendall Rawls’ Insight:

The identified or developing successor may have all your same strengths or maybe completely different.  In family business environments, we often see next-generation leadership to have different strengths than those of the existing owner.  What matters most in leadership transition is finding the balance.

If they have the capacity and commitment to developing as a leader, from the questions listed above, supporting a different strength in your successor is all about teamwork.   You can either recruit talent from the outside or develop from within.

If you have been committed to investing in your people and have a strong talent magnet culture, you are already on your way to building a team to support the differences in leadership between you and your developing successor. If your developing successor exemplifies different strengths and approaches to getting things done then you, TRANSITION, is the name of the game.  Otherwise, it can feel like a culture shock to your organization.

It is essential, you allow your developing successor to take on more responsibility, while you are there to support coaching and development.  Allow your successor to lean into their strengths while you are there to provide historical context in how and why things have been done a certain way.  With an agreed-upon strategy, a transition provides team members to adjust.

Dr. Merlot’s Perspective:

In order to slowly introduce your successor to the way things operate, you can incrementally transfer control of some responsibilities while you minimally retain strategic control.  Your attorney can show you a variety of creative mechanisms allowing you to test your successor and ideally confirm your confidence.  Your enthusiasm for this process is dictated by personal and business issues, such as your health, your desire to retire, franchiser issues, credit continuity issues, etc. Needless to say, at some point in time, you must either achieve confidence or take a chance and pray for the best.

Kendall Rawls’ Final Thoughts:

Fundamentally, succession planning is all about creating options so you can achieve what you want.  Engaging in the process will create choice, that if one strategy doesn’t seem to be working, you already have another one in the works.  It creates an “A”, “B”, “C” etc Plans.   And, there is always a solution to achieve a Win-Win-Win.  It may just require looking at the situation, a person, a strategy in a different way.

Third-party perspective and leaning on a team of advisors provide you with ideas and creative problem solving so all who are involved feel as though they have won.

For more resources on building a strong business and succession planning, visit www.seekingsuccession.com. And leverage our Succession Readiness Survey. A 7-minute investment in time will put you in an informed position of opportunities many business owners overlook impacting business value, growth, lifestyle, and ultimately achieving your vision.